Asset Financing

Asset financing occurs when a business uses its assets to obtain a loan. Usually, a loan is granted after a business proves its income, has an established, and good, credit history, and all that jazz. This type of financing simply concentrates on what assets the business is showing on their inventory, accounts receivable and investments.

It's sort of like taking a personal loan on your house...you are offering the bank the right to take your house if you default. In this case, it's a business offering their assets in a similar way. This type of financing is especially popular with smaller businesses or those with more stuff than credit.